I would like it if the folders were done better. Would be nice to have more than just a single letter for folders, or a picture, would be better. I organise my games as folders for each system like NES, GameBoy, Color GameBoy, Advance GameBoy. Have to name them like that for the initials, just don't think it looks so great :/ How do others do it?

I don't use folders.
I have a lot of eShop games and I don't want to hide them away in folders where they can't be seen.
I just have them sorted on my home screen in a rough order of favourite to least favourite, then my Virtual Console games by system and whatnot.

Nintendo Pocket Football Club - Club Name:True Teikoku | Club ID: 9697C6E03

Not really I dont like the idea of not having a physical game due to the fact that a digital one can be taken off of the service at anytime. The only digital games I have are VC and Eshop exclusives but that's cause they dont have them in physical forms for the 3DS.

I've got my home screen zoomed to the maximum level. I've then got 7 folders spelling my name (My first name is "Sam" and my surname starts with an S so I just use the one S and have my first name horizontally across the top and my surname vertically down the screen).

I've got folders for:

3DS eShop and Digital titles
Videos (Apps and trailers)
Apps folders (Mostly default stuff, Pokemon apps and the Olympic 2012 cards app)
DSi Games
Nintendo Virtual Console
Sega Virtual Console
More to do (Games where I've finished the main campaign but haven't completed all of the extras).

Anything I haven't completed is on my dashboard. Currently that's 52 games including my current cartridge, eShop app, StreetPass Plaza, settings app and, of course, Animal Crossing, because I'm always playing that!

My problem is I'm a bit OCD so I struggled to choose a folder layout. Having the separate folder for games I've not quite finished has helped but I'm not sure whether to split them into genre so I can choose something depending on my mood.

Not really I dont like the idea of not having a physical game due to the fact that a digital one can be taken off of the service at anytime. The only digital games I have are VC and Eshop exclusives but that's cause they dont have them in physical forms for the 3DS.

If a game is taken off the service you can still re-download it from your download history. They stay in your account forever However, if a physical copy is lost or broken, it is gone forever. That being said, I rarely get digital copies of retail games because they just take up so much damn space and I usually fill up that space with all the exclusives you mention. And they take AGES to download...

I also don't buy digital copies of physical games.
Pokemon Y is the one exception I made, as I figure my interest in that might change to the point where I only want to sometimes play it.
Though I ended up also buying a physical copy of X. I figure if I want a physical backup at some point, I better at least get something SLIGHTLY different.
(though luckily at least 3DS uses standard SD cards and allows you to copy the games to other devices like a PC incase the SD card dies, you can just buy a new card and copy back over.
Though that only works as long as the same 3DS itself remains working. Because of ofcourse the files are encrypted so they can only be copied for backup and not piracy.)

I have my games arranged broadly by what kind they are: so, there's a folder for DSiware, 3DSware, Retail games, demos, and Virtual Console releases. The games in the VC folder are all separated physically by at least two block spaces from other kinds of games, and are alphabetized within their given section. Thus, you have the GB section, the GB Color section, the GG section, and the NES section, each independently alphabetized.

I don't use Folders myself, I have all of my Games displayed in my own order on my Home Menu. That & I have maxed out the amount of Games that the Home Menu can hold. Including the Cartridge, 331 Boxes. But I do have over 400 Games total on my 3DS XL though. And for anyone who is wondering, I still have roughly 40,000 Blocks left on my 32 Gig SD Card, in order for me too download a new Game or sometimes download a Patch, I have too delete another Game too make room, it sucks & Nintendo won't fix my problem because I'm the only one with it. I didn't get a big SD Card so I would have too deal with crap like this, I wanted everything on 1 SD Card.

Not really I dont like the idea of not having a physical game due to the fact that a digital one can be taken off of the service at anytime. The only digital games I have are VC and Eshop exclusives but that's cause they dont have them in physical forms for the 3DS.

If a game is taken off the service you can still re-download it from your download history. They stay in your account forever However, if a physical copy is lost or broken, it is gone forever. That being said, I rarely get digital copies of retail games because they just take up so much damn space and I usually fill up that space with all the exclusives you mention. And they take AGES to download...

I can't download Brain Training anymore since it was removed from the eshop.

Not really I dont like the idea of not having a physical game due to the fact that a digital one can be taken off of the service at anytime. The only digital games I have are VC and Eshop exclusives but that's cause they dont have them in physical forms for the 3DS.

If a game is taken off the service you can still re-download it from your download history. They stay in your account forever However, if a physical copy is lost or broken, it is gone forever. That being said, I rarely get digital copies of retail games because they just take up so much damn space and I usually fill up that space with all the exclusives you mention. And they take AGES to download...

I can't download Brain Training anymore since it was removed from the eshop.